nep-cfn New Economics Papers
on Corporate Finance
Issue of 2008‒08‒06
two papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Is there a cross listing premium for non-exchange traded depositary receipts? By Thomas C O'Connor;
  2. A Framework for Developing Secondary Markets for Government Securities By Zsófia Ãrvai; Geoffrey Heenan

  1. By: Thomas C O'Connor (Economics, National University of Ireland, Maynooth);
    Abstract: In this paper, I examine the valuation effects of trading in the U.S. as non-exchange issues i.e. Level 1 and 144 firms for non-U.S. firms. The study is motivated by two facts; first, while the number of new Level 2/3 issues has fallen 2001, Level 1 issues have remained an attractive listing option for non-U.S. firms. Second, while on theoretical grounds, firms from low-disclosure regimes have most to gain from exchange listing; these firms tend to list in the U.S. as non-exchange issues. Here, I examine whether the continuing attractiveness of, and the tendency of firms to choose a Level l/144a listing is value enhancing. My results suggest that the tendency on the part of firms from low-disclosure regimes to choose non-exchange issues is justified. Relative to their high-disclosure peers, these firms tend to gain most from trading in the U.S. However, for Rule 144a issues, the valuation gains are short-lived.
    Keywords: Cross listing, Level 1, Rule 144a, Tobin's q
    JEL: G15 G34 G35
  2. By: Zsófia Ãrvai; Geoffrey Heenan
    Abstract: This paper consolidates previous work on the development of secondary markets for government securities, and focuses on the sequencing of measures necessary for their development. Six main lessons are identified: (i) a commitment to achieving and maintaining a stable macroeconomic environment, especially prudent fiscal policy, should underpin market development; (ii) a sound and transparent public debt management strategy supports secondary market activity; (iii) a deep and diverse investor base is required; (iv) poor market infrastructure leads to high transaction costs, slow order execution, and excessive operational risk, which all inhibit trading; (v) secondary market growth is facilitated by effective monetary policy implementation; and (vi) reforms should be sequenced to ensure even development of all the structures supporting the secondary market.
    Keywords: Securities markets , Government finance statistics , Capital markets , Public debt , Monetary policy , Fiscal policy ,
    Date: 2008–07–18

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